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Synopsys to Enhance Shareholder Return With New ASR Pact

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Continuing with its efforts to enhance shareholder value, Synopsys Inc. (SNPS - Free Report) , yesterday, announced that it is set to buy back $165 million worth of its common stocks under an accelerated share repurchase (ASR) program. This initiative reflects the California-based company’s sound financial position and favorable prospects.

The company announced an agreement with Wells Fargo Bank NA in this connection. Per the agreement, Synopsys will initially receive approximately 1.5-million shares, while the remaining shares will be received on or before Nov 1, 2018, depending on the completion of purchase. The number of shares to be repurchased will be calculated on the basis of Synopsys’ volume weighted average share price during the stated period, after adjusting for a discount.

ASR arrangements are key elements of the company’s overall framework for enhancing investors’ worth. Since fiscal 2015, the company has completed $905 million worth of ASR program.

Apart from the ASR agreements, the company has also repurchased its common stock from the open market. In April 2018, Synopsys approved an extension of the company’s existing share-repurchase authorization to make it worth $500 million again. In fiscal 2017, it repurchased common stock worth $400 million.

Synopsys’ financial strength enables it to continue with the buyback program. As of Apr 30, 2018, the company’s cash, cash equivalents and short-term investments were $570.8 million. Its aggressive share-repurchase policies are anticipated to boost investors’ confidence. Synopsys’ strategy to return wealth to shareholders highlights its growth potential and stable liquidity position.

Synopsys, Inc. Price

Other companies which have a consistent record of returning value through share repurchases and dividend payments are Microsoft (MSFT - Free Report) , Apple Inc. (AAPL - Free Report) and Electronic Arts Inc. (EA - Free Report) .

We believe apart from enhancing shareholders’ return, these initiatives also raise the market value of the stock. Through share repurchases and dividend payouts, companies boost investors’ confidence, persuading them to either buy or hold the scrip.

Synopsys carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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